Ric Spooner, Chief Market Analyst at CMC Markets, says investors
are pricing in the possibility of sustained weakness in the oil
price and a scenario in which excess supply capacity might
persist for the next year or two.

“While today’s large drop in both oil prices and energy stocks
might turn out to have been amplified by Thanksgiving holiday in
the US and thin volumes, it does seem likely that OPEC’s decision
creates the potential for a lower range of oil prices for some
time to come,” he says.

He says today’s OPEC decision means that new oil projects will be
difficult to justify and finance for some time.

There is also likely to be a decline in exploration activity.

Santos has lost almost 10% to be trading at $10.50, Sundance
Energy more than 15% to $0.695, Oil Search more than 8% to $7.77,
Origin Energy 5% to $12.51, Woodside Petroleum more than 3% to
$37.20 and Horizon Oil weaker by more than 6% to $0.21.

A falling oil price has an upside in cheaper fuel, a major cost
for airline Qantas whose shares jumped 3% to $1.85. Qantas is up
6% this week.

The major banks were all weaker, led by Westpac which lost 0.87%
to $32.94.